Aggregate Demand Decreases and Real Output Falls but the Price

question 90

Multiple Choice

Aggregate demand decreases and real output falls but the price level remains the same. Which of the following factors most likely contributes to downward price inflexibility in the immediate short run?

• A) The multiplier effect
• B) The wealth effect
• C) Fear of price wars
• D) Business taxes

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Definitions:

Freud's Term

A reference to concepts or terminology introduced by Sigmund Freud, the founder of psychoanalysis, such as the unconscious mind, ego, id, and superego.

Biological Side

Aspects of an individual's physical health, genetic makeup, and physiological processes.

Id

A component of the personality in Freudian psychoanalysis that is driven by the pleasure principle.

Freud's Model

A theoretical framework for understanding human behavior and the mind, emphasizing unconscious processes, sexual and aggressive instincts, and early childhood experiences.